To form an LLC in Alabama, file Articles of Organization with the Alabama Secretary of State online or by mail. The state filing fee is $200. Processing takes 3–5 business days online. You also need a registered agent with an Alabama address, and must file an annual Business Privilege Tax return starting the first year.
Prefer to have the filing done for you? LegalZoom handles Alabama LLC formation.
Form Your LLC with LegalZoom →Alabama LLC formation — step by step
Choose and reserve your LLC name
Your LLC name must be unique in Alabama and include "LLC," "L.L.C.," or "Limited Liability Company." Alabama requires name reservation before filing — unlike most states where it's optional. Use the Alabama SOS business name search to confirm availability, then file a Name Reservation ($28 online, $25 by mail). You cannot file the Certificate of Formation without attaching the Name Reservation Certificate.
Choose a registered agent
Every Alabama LLC must have a registered agent — a person or company with a physical Alabama address available during business hours to receive legal documents. You can be your own registered agent or use a registered agent service ($49–$125/year).
File the Certificate of Formation
Alabama's formation document is called a Certificate of Formation (not Articles of Organization as in other states). File at sos.alabama.gov ($208 online) or by mail ($200). Attach your Name Reservation Certificate — it is required. You'll need your LLC name, registered agent's information, and whether the LLC is member-managed or manager-managed. Online filing processes in 5–7 business days.
Create an operating agreement
Alabama does not legally require an operating agreement, but every LLC should have one. It defines member ownership percentages, management structure, voting rights, and what happens if a member leaves. Without one, Alabama's default LLC rules govern your business — which may not reflect your intentions.
Get an EIN from the IRS
An Employer Identification Number is your LLC's federal tax ID. It's free from the IRS at irs.gov and required to open a business bank account, hire employees, or file business taxes. Apply online and receive your EIN instantly.
Get your business license
Alabama requires a state Business Privilege License plus a local license from your county or city. The state privilege license costs $10–$100 depending on business type. Most counties also require a local license — fees vary widely.
Open a business bank account
Keep your personal and business finances separate from day one. You'll need your EIN and Articles of Organization to open most business bank accounts. Mixing personal and business funds can expose you to personal liability — defeating the purpose of an LLC.
File the Business Privilege Tax return
Alabama eliminated its annual report requirement under Act 2024-213 (effective October 1, 2024). Instead, Alabama LLCs file Form PPT (Business Privilege Tax) by April 15 each year. Under Act 2022-252, if your calculated tax is $100 or less, the payment is fully exempt — most small LLCs owe $0. You also file an initial Form BPT-IN within 2.5 months of formation (paper only). See our full Alabama Business Privilege Tax guide.
Alabama LLC costs
| Item | Cost | Notes |
|---|---|---|
| Articles of Organization | $200 | One-time state filing fee |
| Name reservation (optional) | $28 | Holds name for 120 days |
| Registered agent service | $49–$125/year | If using a service vs. acting as your own |
| Operating agreement | $0–$500 | Free if DIY; attorney or online service if not |
| Business privilege license | $10–$100/year | State license; local fees additional |
| Business privilege tax | $100 minimum/year | Annual; due April 15 |
| EIN number | Free | Directly from IRS at irs.gov |
Formation service vs. DIY: You can file directly with the Alabama Secretary of State for $200. Using a formation service like LegalZoom or ZenBusiness typically costs $0–$149 + the $200 state fee — they handle the paperwork and keep you from making costly errors. Worth it for most first-time business owners.
Alabama LLC vs. other business structures
Not sure if an LLC is right for you? See our full comparison of sole proprietorship vs. LLC. In short: an LLC provides personal liability protection that a sole proprietorship doesn't. If your business could ever be sued — and most can — an LLC is worth the $200 filing fee.
Frequently asked questions
Don't forget the federal BOI Report. Every new Alabama LLC must file a Beneficial Ownership Information Report with FinCEN within 90 days of formation. It's free and takes 15 minutes at fincen.gov — but missing it carries a $500/day penalty. See our full guide: BOI Report Alabama.